Blog

Jerry is the Risk Manager of Awesome Automation Inc. As part of his duties, he is completing the Risk Management Process for the firm. Jerry spent weeks using identification methods to identify the most pressing risks facing the firm, and placed them all on a Risk Register. After that, he measured and analyzed all of the risks on the Risk Register to quantify each risk in terms of frequency, severity, and volatility.  Following the steps of the risk management process, what will Jerry do next? 

In the last lecture, I discussed a neurotransmitter that might be responsible for one’s difficulty to change beliefs when confronted with facts that contradict these beliefs. This neurotransmitter is _____ .

Swarm AI (or AI swarm) provides what one needed component for the interconnections among people creating the human swarm?

Groups are not usually involved in making team or organizational decisions.

According to Baird et al. (2012), engaging in simple external tasks that allow one’s mind to wander may facilitate creative problem solving.

Perky’s (1910) experiment, in which participants were asked to “project” visual images of common objects onto a screen, showed that _____ .

Suppose a firm faces a risk that is both very high frequency and very high severity. Unfortunately, this risk is associated with an activity that is essential to its business operations, meaning the activity must be continued or the business simply will not be able to operate at all.  Which of the following risk management strategies should this firm utilize to manage this difficult loss exposure?

The risks best suited for funded retention are those in which the risk has: 

**This is a Multi-Part Multiple Choice Question = worth 8 points total Mark is the Risk Manager of Crown Condo Inc. – which owns a $500,000 wood frame condominium building in Redding, California. Being located in Northern California, the condo building faces the peril of wildfire.  If no wildfire strikes the area (No Loss) = then no loss occurs to the condo building. If a wildfire would strike the area, it would completely destroy the entire condo building (Total Loss of the value of the building) Mark estimates the probability of a wildfire striking the area = 1.5%  Mark is deciding between three Risk Management Options for the Crown Condo building:  1) Retention 2) Deductible Insurance  Policy Limit = $500,000 (the value of the building) Deductible = $3,000 Premium = $10,000 3) FULL Insurance  Face Amount = $500,000 There is no deductible with Full Insurance  Premium = $15,000   Question #1: [6 points] Complete the below Loss Matrix based on the information provided to you above:  Risk Mgmt. Option No Loss Total Loss  RM Option #1 = Retention Loss Amount [option1] [option2] Risk Treatment Costs [option3] [option4] RM Option #2 = Deductible Insurance Loss Amount [option5] [option6] Risk Treatment Costs [option7] [option8] RM Option #3 = Full Insurance Loss Amount [option9] [option10] Risk Treatment Costs [option11] [option12]   Question #2: [1.5 points] Mark’s Worry Value for each of the three risk management options is as follows:  Worry Value for Retention = $5,000 Worry Value for Deductible Insurance = $1,500 Worry Value for Full Insurance = ???   Calculate the TOTAL COST of each of the three risk management options:  ***The first component of Total Cost = the Expected Value or Loss > has been provided for you… no need to calculate it!    RM Option #1: Retention > TOTAL COST = ($7,500) + (?) + (?) = [Q1] RM Option #2: Deductible Insurance > TOTAL COST = ($45) + (?) + (?) = [Q2] RM Option #3: Full Insurance > TOTAL COST = ($0) + (?) + (?) = [Q3]    Question #3: [0.5 point] If Mark’s decision rule is to minimize Total Cost – which risk management option does he choose?  = [Q4]

There is one risk modification technique that, if implemented by a Risk Manager correctly, can actually reduce the probability of a loss occurring to zero.  Which risk modification option is this?